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Nine years after the vote on Brexit, the latest UK economic indicators send a strong message about an ailing economy that is yet to emerge from the shadows of the \u2018leave\u2019 vote. According to experts, some of the negative impacts of Brexit will endure.<\/p>\n
GDP has been contracting for two consecutive months, coupled with rising inflation and unemployment, and accompanied by a highly uncertain geopolitical environment and trade wars.\u00a0<\/p>\n
UK GDP grew by 0.7% quarter-on-quarter in the first three months of 2025, but monthly data shows that the output contracted 0.1% in May after a 0.3% decline in April. According to S&P Global Ratings, these figures put the economy on course for 0.1% GDP growth in the second quarter, if there is no growth in June.<\/p>\n
Inflation increased to 3.6% in June \u2014 up from 3.4% in May and slightly ahead of expectations. This ties the hands of the Bank of England, which is aiming for a 2% inflation target before it lowers the benchmark rate, currently sitting at 4.25%.\u00a0<\/p>\n
These weak datasets indicate that the UK has \u201clittle spare capacity to grow,\u201d Marion Amiot, Chief UK Economist at S&P Global Ratings, told Euronews Business.\u00a0<\/p>\n
Some hope that the UK will be able to boost its GDP through exports, supported by trade agreements, including the latest with the US.<\/p>\n
However, exports alone might not be enough to fix a fundamental problem: the UK is contending with cripplingly low productivity.<\/p>\n
According to Amiot, productivity woes partially stem from Brexit. \u201cIt has contributed to reducing the UK\u2019s labour supply and pulled the brakes on investment on the back of uncertainty in the years following the referendum,\u201d she said.<\/p>\n
She added that sluggishness in the key financial services sector has also been playing a role: \u201cProductivity growth in the UK has been particularly weak since the Great Financial Crisis, especially in the financial sector.\u201d<\/p>\n
UK labour statistics are also signalling a difficult path ahead for the economy. The number of job vacancies has been falling since April 2022. Unemployment in the country has been on the rise since August 2024, and sat at 4.7% in May, the highest level in four years.\u00a0<\/p>\n
As poor productivity limits wage growth, this is expected to slow inflation.\u00a0<\/p>\n
\u201cWage growth has slowed, and unemployment has risen again. For the Bank of England, this is a sign of growing slack in the labour market, which is likely to ease inflationary pressures, and means it can cut rates sooner rather than later,\u201d said Sarah Coles, head of personal finance at Hargreaves Lansdown.<\/p>\n
Job vacancies have also been falling due to higher costs, partially attributed to the UK government\u2019s decision to increase national insurance contributions, a cost that employers pay for every person on the payroll.<\/p>\n
What Brexit really cost the UK<\/strong><\/p>\n Nine years after the referendum, the Office for Budget Responsibility (OBR) assessed the economic impact of Brexit. Researchers came to the conclusion that \u2014 since 2020 \u2014 withdrawal from the EU has led to reduced productivity, lowering GDP by 4%, and trade by about 15%, in both goods and services, compared to a \u2018remain scenario\u2019. Brexit has also had a sizeable impact on shrinking investments.<\/p>\n According to John Springford, an associate fellow at the London-based think-tank Centre for European Reform, Brexit has cost the state \u00a340 billion (\u20ac46.1bn) since 2019.<\/p>\n \u201cThe 2019-2024 parliament raised taxes by around \u00a3100 billion, and if we take the OBR\u2019s 4% loss of productivity to be the true figure, \u00a340 billion of those tax rises were needed because of EU withdrawal,\u201d he wrote in a recent study.<\/p>\n